MECHANICAL CONTRACTING | BESCHLOSS | CONTINUED FROM PAGE 70
those surveyed reported greater cash balances than a year ago. While 30% indicated that their balances remained the same, only 30% reported cash and short-term investment balance reduction. With May consumer confidence in a tailspin, this
business retention of record cash positions should come as no surprise. In fact, it bodes ill for employment reduction, as thousands of companies look for technological upgrading to replace “hands on” jobs, whether on the shop floor or in the back office. The motivating factor behind this super-cautious
approach by a great majority of America’s businesses is plummeting confidence in the federal government’s increasing rash of financial regulations. Also weighing heavily is the fear of healthcare premiums coming down the pike. Independent surveys point to the latter as being of greatest concern to those interviewed. This, in turn, has paralyzed the desire to hire additional employees, even as attrition reduces the workforce due to retirement or extraneous causes such as health issues. This freezing of companies’ liquidity has had a positive
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effect on debt reduction and on unexpected decreased demand for loans from financial institutions, even at current record low interest rates. Companies comprising the Standard & Poor’s 500 group of corporations has exceeded $1 trillion for the first time ever. It’s estimated that all U.S. businesses as a whole are stashing away over $3 trillion on their bottom lines. Banks add another $1 trillion to this unprecedented sum. With the current post recessionary period flat-lining the
traditional recovery surge, the immense liquidity accumulating on the sidelines could provide the dynamic necessary for a massive expansion outburst, once America’s business regains its confidence. Unfortunately, there is no indication that this will take
place until the American public has registered its decision at the forthcoming 2012 presidential election.
Housing pricing plunges found worse than Great Depression levels
Although the nationwide inventory of available housing,
both existing and newly-built homes continues to shrink, the price tag on these establishments continues to drift to levels not seen since the mid-nineties. This drop exceeds the percentage shrink reflective of the 1930s’ economic catastrophe. As thousands continue to desert homes with values
lower than their current mortgages, often committed to by owners unable to meet monthly payments, it’s estimated that 40% of homes purchased currently are from banks and other lenders who are stuck with unwanted real estate. This desperate situation is worsened by a massive
departure from home ownership, which was drummed into the successive post World War II generations as the bedrock of lifetime fixed asset ownership. This has reduced home equity as a percentage of total assets to the lowest level since World War II. Tens of thousands of people, whether metropolitan or
rural, are looking for rental apartments or month-to- month individual home leases wherever possible. Ironically, this is increasing shortages in big city high rises as well as in suburban and rural areas. It’s also leaving many homebuilders and developers high and dry, while creating opportunities for contractors, architects/engineers and builders to react to this rolling demand. However, the homeowning populist propaganda so
firmly persuading hundreds of thousands of wage earners to buy low down-payment, low interest housing that their incomes could ill afford, put millions into a hole at the time of the September 2008 financial crash. In an unprecedented residential Ponzi scheme, many
Precision
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were persuaded that the multiplicity of resale dollars from future home pricing would compensate for those unaffordable payments. To close the deal, a succession of populist presidents made available multi- billions of mortgage support to encourage many would-be homeowners to make such an income-crushing commitment. This has left
L G ® ®
the American taxpayer to clean up the mess made by government- backed mortgage giants Fannie Mae and Freddie Mac, who continue to sink deeper into unfathomable debt. ;
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